On Thursday, October 17th, a Chinese citizen admitted to illegally exporting U.S. technology to a Chinese entity that was placed on the U.S. Commerce Department’s Entity List, in violation of the International Emergency Economic Powers Act (IEEPA) and the Export Administration Regulations (EAR). U.S. Federal District Judge William Alsup accepted his plea.
According to a press release issued by the Northern District of California prosecutor’s office, 65-year-old Chinese citizen Lin Chen acknowledged that he represented Jiangsu Hantang International Trading Group Co., Ltd. (JHI) based in Nanjing, in purchasing a wafer-cutting machine for Chengdu GaStone Technology Co., Ltd. He also admitted to knowing that GaStone had been added to the Entity List by the U.S. Commerce Department on August 1, 2014.
Under federal regulations, entities listed on the Entity List by the Commerce Department are prohibited from receiving certain export-controlled items. The wafer-cutting machine is used for slicing thin semiconductor silicon wafers, and exporting it to end-users like GaStone requires a Commerce Department permit.
In accordance with the plea agreement, around December 10, 2015, Chen collaborated with a co-defendant to ship a DTX-150 without a Commerce Department export license to China under JHI’s name, intending to sell it to GaStone.
Prior to this, Chen was aware that it was illegal to export related technology to GaStone without a license, including the DTX-150 dicing and breaking machine used for processing silicon wafer microchips.
However, Chen utilized JHI as an intermediary, concealing the fact that GaStone was the actual intended recipient of the technology.
A federal grand jury indicted Chen on December 1, 2020, charging him with conspiring to violate IEEPA, submitting false electronic export information, smuggling, and breaching IEEPA. Per the plea agreement, Chen pleaded guilty to the fourth charge of violating IEEPA by facilitating illegal exports. The defendant is currently out on bail.
According to the press release, Chen’s sentencing hearing is scheduled for January 28, 2025, to be presided over by Judge Alsup. Violating IEEPA can result in a maximum penalty of 20 years in prison and a $1 million fine.
Chen’s indictment resulted from a joint investigation by the Federal Bureau of Investigation (FBI), Homeland Security Investigations (HSI), and the Commerce Department’s Bureau of Industry and Security (BIS).